Wednesday, July 23, 2014

Linda Deavers (61, Fishers, Indiana) was found guilty of 10 counts of wire
fraud and 5 counts of money laundering. Deavers faces a maximum penalty
of 20 years in federal prison for each count of wire fraud and 10 years
in federal prison for each count of money laundering.
Deavers was indicted in September 2012. She was arrested in October
2013, after flying into California from Hong Kong. The jury returned the
verdict on July 11, 2014. Her sentencing hearing is scheduled for
October 2, 2014.
According to evidence presented at trial, Deavers devised an
investment fraud scheme that used an entity by the name of Angel Annie
Humanitarian Trust, LLC. As part of her pitch to investors, Deavers
represented that the entity was a Section 501(c)(3) charitable
organization, that she had connections to trading programs in Europe
that would generate large rates of returns and that she had been
successful in investing in such trading programs previously. She
represented that any money invested with her and Angel Annie
Humanitarian would be invested in such trading programs overseas. None
of those representations were true. Deavers collected more than $5.2
million from investors located in Florida.
After returning approximately $1.8 million to investors, Deavers used
most of the remaining $3.4 million in proceeds to fund her lifestyle,
in Indiana and Europe, and to pay various expenses for herself and her
family, including a $1 million deposit on a mansion. To lull her
investors into a false sense of security, Deavers used e-mail and Skype
to provide the investors with a series of false excuses as to why she
had not been able to successfully invest their money. Even after Deavers
had spent the last of the funds from her victims, for several years,
she continued to falsely claim that she was working on investments for
them.

An indictment was unsealed earlier today charging individuals with
bank fraud and conspiracy arising from a scheme to take advantage of
plans by an all-girls high school in Hempstead, New York, to expand its
campus and build an athletic field for students.
The defendants, two couples, including a real estate attorney and the
officer of a real property corporation, were arrested earlier today by
special agents of the Federal Bureau of Investigation and will be
arraigned this afternoon before United States Magistrate Judge William
D. Wall at the United States Courthouse in Central Islip, New York. If
convicted, each defendant faces up to 30 years of imprisonment, fines,
and the forfeiture of $539,000 in allegedly illegal profits arising from
the scheme.
The charges and arrests were announced by Loretta E. Lynch, United
States Attorney for the Eastern District of New York, and George
Venizelos, Assistant Director-in-Charge, Federal Bureau of
Investigation, New York Field Office (FBI).
As set forth in the indictment, defendants Sofia Atias, Joseph Atias,
and Nicholas Pellegrini conspired to defraud Bank of America of over
half a million dollars by fraudulently avoiding foreclosure on a home
through a fraudulent “short sale” of the property to a straw buyer —
defendant and co-conspirator Paula Berckhoff, also known as “Paula
Pellegrini” — and then profiting from the home’s re-sale or “flip” to
Sacred Heart Academy, a Catholic all-girls high school that paid the
conspirators almost $1 million for the property to accomplish
long-sought plans to improve and expand its facilities.
Early in 2011, defendant Sophia Atias had defaulted on some $750,000
in a mortgage and home equity loan secured by a home she owned at 83
Cathedral Avenue, Hempstead, New York, which sat adjacent to the high
school. As Bank of America began foreclosure proceedings, defendants
Sophia Atias, Joseph Atias, and Nicholas Pellegrini, acting as the
couple’s attorney, negotiated with representatives of Sacred Heart
Academy and ultimately won a commitment from the school to buy the
property for $925,000 — an amount that would have been enough to repay
the Atias’ debts to the bank.
Instead, the defendants allegedly conspired to induce Bank of America
to agree to a short sale of the Cathedral Avenue property. Short sales
are an alternative to lengthier and often costly foreclosure
proceedings. In a short sale, a bank agrees to accept whatever price a
defaulting borrower can get on the immediate or short sale of a property
in foreclosure. As the bank did here, lenders may also release the
borrower from any obligation to repay any remaining balances owed on the
original mortgage or loans.
Knowing that Sacred Heart Academy had already agreed to buy the
Cathedral Avenue home for $925,000, the defendants nonetheless induced
Bank of America to agree to a short sale of the house for only $480,000
to Jefferson Real Property Corporation, whose secretary and treasurer
was defendant Nicholas Pellegrini’ s wife. As part of their agreement
with the bank, Mrs. Pellegrini, using the name Paula Berckhoff, and Mrs.
Atias, both falsely represented that neither would receive any
undisclosed proceeds from the transaction and further claimed that the
short sale was not an attempt to “flip” or use “straw buying” to avoid
repayment of Atias’ debt.
In fact, as charged in the indictment, several months after the
fraudulent short sale, the Atiases and Pellegrinis did re-sell or “flip”
the Cathedral Avenue home to Sacred Heart Academy for the previously
agreed price of $925,000. Given the fraudulent inducement to accept the
short sale, Bank of America was defrauded of almost $540,000.
“Through a web of lies and false documents, the defendants took
advantage of a school’s desires to improve its students’ athletic
facilities, lied to win concessions from a bank, and then lied again by
‘flipping’ the property and defrauding the bank of over half a million
dollars. This is not a case about tough bargaining. This is fraud, pure
and simple,” stated United States Attorney Lynch.
FBI Assistant Director-in-Charge Venizelos stated, “As alleged in the
indictment, while the defendants did not brandish a weapon, they stole
over half a million dollars from Bank of America based upon their false
misrepresentations and filing of false documents with the victim-lender.
Bank fraud burdens lenders with bad loans and weakens our financial
markets. Individuals who engage in this criminal activity should be
reminded that they will be vigorously investigated and held
accountable.”

Thursday, July 17, 2014

A six-count indictment was unsealed this morning in federal court in
Brooklyn charging mortgage broker Alex Barrett, property manager
Barthelemy Adjavehoude, title agent Michelle Baker, property manager and
self-described foreclosure specialist James Bayfield, and property
managers Samuel Terrell Bell and Dirk Hall with engaging in a bank and
wire fraud conspiracy to steal millions of dollars from financial
lending institutions.1 Defendants Adjavehoude, Baker, Bayfield, and Bell
were arrested and will be arraigned this afternoon before United States
Magistrate Judge Lois Bloom at the United States Courthouse in
Brooklyn, New York. The defendants face penalties of up to 30 years’
imprisonment if convicted.
The charges were announced by Loretta E. Lynch, United States
Attorney for the Eastern District of New York; George Venizelos,
Assistant Director-in-Charge, Federal Bureau of Investigation, New York
Field Office (FBI); Michael Stephens, Acting Inspector General, Federal
Housing Finance Agency, Office of Inspector General (FHFA-OIG);
Christina Scaringi, Special Agent-in-Charge, Northeast Region, U.S.
Department of Housing and Urban Development, Office of Inspector General
(HUD-OIG); and Derek Evans, Special Agent-in- Charge, Federal Deposit
Insurance Corporation-Office of Inspector General, New York Region.

The Justice Department, along with federal and state partners, today
announced a $7 billion settlement with Citigroup Inc. to resolve federal
and state civil claims related to Citigroup’s conduct in the packaging,
securitization, marketing, sale and issuance of residential
mortgage-backed securities (RMBS) prior to Jan. 1, 2009. The resolution
includes a $4 billion civil penalty—the largest penalty to date under
the Financial Institutions Reform, Recovery and Enforcement Act
(FIRREA). As part of the settlement, Citigroup acknowledged it made
serious misrepresentations to the public—including the investing
public—about the mortgage loans it securitized in RMBS. The resolution
also requires Citigroup to provide relief to underwater homeowners,
distressed borrowers and affected communities through a variety of means
including financing affordable rental housing developments for
low-income families in high-cost areas. The settlement does not absolve
Citigroup or its employees from facing any possible criminal charges.
This settlement is part of the ongoing efforts of President Obama’s
Financial Fraud Enforcement Task Force’s RMBS Working Group, which has
recovered $20 billion to date for American consumers and investors.

Saturday, March 22, 2014

Roger K. Howard, 51, Englewood, Colorado, was sentenced on Tuesday by U.S. District Court Judge R. Brooke Jackson to serve 108 months in federal prison for wire fraud and money laundering.
Following his prison sentence, Howard was ordered to serve three years on supervised release. He also has to pay $8.9 million in restitution to the victims of his crime. The defendant, who appeared at the sentencing hearing free on bond, was ordered to report to a facility designated by the U.S. Bureau of Prison within 15 days from the date of designation.
As previously reported by Mortgage Fraud Blog, Howard, along with a co-defendant, Oai Quang Luong, 45, was indicted by a federal grand jury in Denver on January 25, 2012. Howard pled guilty on June 21, 2013. He was sentenced on February 11, 2014. Howard‘s co-defendant, Oai Quang Luong, pled guilty to wire fraud on May 22, 2013, and was sentenced by Judge Jackson on August 15, 2013, to serve 18 months in prison. Luong was ordered to pay restitution totaling $3.2 million joint and several with Howard.
According to the facts contained in the indictment as well as the stipulated facts contained in the plea agreement, in 2006 and 2007, Howard devised and participated in three similar but separate mortgage fraud schemes. The first and larger scheme involved the sales of 26 townhomes in a development known as Oliveglen Villas, East Princeton Place, Aurora, Colorado.

Seven suspects who have been charged in a mortgage fraud scheme that defrauded more than 1,550 Inland Valley, California, homeowners seeking loan modification services during the foreclosure crisis have been arrested.
The felony complaint alleges that Nehad “Nick” Ayyoub Ayyoub, 57, San Bernardino, California, and president of The Firm Loans, Insurance and Investments Inc. and First Choice Debt Solutions Inc., along with his six colleagues, Ghydan Ayyoub Rabadi, 38, Los Angeles, California, Zaid Rabadi, 49, Los Angeles, James Clemons, 55, Riverside County, California, Wissam Ismail, 32, Riverside County, Eddie Mercado, 57, San Bernardino, and Majid Safaie, 60, Orange County, California, deceived homeowners by illegally charging up-front payments for loan modification services and lying about the services they provided.
The suspects are charged in a 24 count complaint of felony grand theft, personal and corporate income tax evasion and conspiracy. The suspects were booked at Murrieta Detention Center, Orange County Jail, Rancho Cucamonga Jail and Azusa Police Department. Ayyoub is being held with bail set at $75,000 and all others are being held with bail set at $50,000. Ayyoub is facing a maximum exposure of 12 years in prison while his colleagues are facing a maximum exposure of 8 years.
According to court filings, Ayyoub and his colleagues took advantage of homeowners who were desperate to lower their mortgage payments by selling them home loan modification services and requiring payment of up-front fees. Homeowners were falsely told that attorneys would be negotiating their loan modifications, that they would get a loan modification with no risk of failure, that they would receive a refund if they were dissatisfied and that the suspects had special contacts with lenders, which would give them an advantage in obtaining lowered monthly payments.
Homeowners were instructed to stop paying their mortgage and to instead give the money to Ayyoub and his colleagues to ensure that they would obtain a loan modification, causing many victims to default on their home loans without obtaining a modification, according to court filings.
The suspects operated this scam from January 2007 to March 2010, according to court filings.
Attorney General Kamala D. Harris announced the arrests.

Michael Wayne Harding, 59, Keswick, Virginia, a businessman and former commercial real estate agent who pled guilty last year to a variety of federal fraud charges, was sentenced in the United States District Court for the Western District of Virginia in Charlottesville.
The defendant previously waived his right to be indicted and entered a plea of guilty to one count of wire fraud and one count of bankruptcy fraud. In district court, Harding was sentenced to 30 months of federal incarceration. In addition, the defendant was ordered to pay more than $2,019,403 in restitution.
According to a statement of facts agreed to by the defendant and admitted to the court at a previous hearing, Harding was the president and sole employee of a company called HMC Holdings. On numerous occasions, Harding attempted to secure mortgages for properties HMC Holdings owned based on improvements that had been made to those properties. However, in order to secure the mortgages, Harding was required to provide the mortgage companies with proof that work had been done to the properties. Harding is alleged to have created fake invoices in order to secure the mortgages.
Harding also admitted that after being issued checks by the mortgage companies intended for the contractors, Harding took those checks to local businesses and had the funds converted for his own personal use.
In April 2011, Harding filed bankruptcy. The defendant admitted today that during his bankruptcy proceedings he filed false monthly operating reports, failed to deposit all income into his debtor-in-possession account (which is required by the court), and lied about forging signatures on releases, liens, and deeds of trust. The defendant also admitted to lying about his relationship with a business partner in connection with a proposed sale of property during his corporate bankruptcy.